CNN’s Eleni Giokos speaks with experts and tracks ups and downs of region’s economy
In the latest edition of Marketplace Middle East, CNN’s Eleni Giokos speaks with economic experts and tracks the ups and downs of the region’s economy. The programme features interviews with Jihad Azour, Director of the International Monetary Fund, Richard Boxshall, Middle East Chief Economist at PWC, Robert Mogielnicki, Senior Resident Scholar at Arab Gulf States Institute in Washington and Haifa Al Saud, Vice Minister of Saudi Arabia Tourism.
According to the IMF’s 2023 economic outlook for the region, oil exporting countries have been benefitting from higher oil prices, with a projected windfall of about $1 trillion between 2022 and 2026. However, while GDP growth in the region was set to hit 5% last year, in 2023 it is expected to fall to 3.6%.
Eleni Giokos caught up with the IMF Middle East Director, Jihad Azour, who described how the country can mitigate some of the issues they now face, “We had unexpected shocks that came after the Covid pandemic. We were about to get out of it with growing recovery. Then we were hit by several shocks in the region, the war in Ukraine, food security issues, the increase in oil and gas prices, but also the tightening of interest rates and the fight against inflation.”
Looking ahead to 2023, Azour adds, “For the oil exporting countries, 2023 will be an acceleration of the recovery to maintain the drive for diversification. For the oil importing countries, it’s a different story. It’s country by country.” He explains that the priorities for 2023 are to fight inflation, address debt issues with sound macroeconomic management, and allow economies to be more resilient in order to attract investment and be more productive.
According to a PWC report, non-oil growth hit 9% in some Gulf countries last year. Richard Boxshall tells CNN that he is looking out for a resurgence in the non-oil economy and an acceleration in investment and efforts related to the energy transition. “With COP 28 taking place in the United Arab Emirates and various commitments from Saudi Arabia and other governments, I think 2023 might be a pivotal year in which we see investment in green technology and green energy.”
According to last year’s World Investment Report by the United Nations Conference on Trade and Development, only one country in the GCC – the United Arab Emirates – ranked in the top 20 for inflows of foreign direct investment.
Robert Mogielnicki states, “The big transition that government officials in the region are going to be trying to achieve is that is one in which the state and the government is not the financier of first and last resort for all development initiatives, but rather where there is a healthy influx of foreign direct investment to help support these economic plans.”
He continues, “Where there is a lot of doom and gloom around the global economy from slowing growth, the GCC is doing pretty well. When the GCC is doing well, it brings people and investment. It’s an oil economy, but it will become important as a non-oil economy. The Middle East has to move in the energy transition, and the GCC is right in the middle of it.”
Travel and Tourism’s GDP growth was expected to more have doubled in the Middle East in 2022, with an 80% increase in spending from international visitors compared to the year prior.
Saudi Arabia was the third largest investor in the sector in 2021, according to the World Travel and Tourism Council. The government now aims to attract 100 million international visitors by 2030.
Mogielnicki details how this would have a knock-on effect elsewhere, “Developments in Saudi Arabia that attract more domestic tourism, and Saudis to local offerings rather than leaving the country, will impact countries like Bahrain.” It will also impact the GCC’s established tourism hub in the UAE. “They are looking to continue to make gains and remain competitive,” he adds.
Vice Minister of Tourism Haifa Al Saud explains Vision 2030, “The aim was to diversify away from oil. What better industry to do that than tourism. We were at 3% contribution to GDP back in 2018. We’re aiming to take that to 10% by 2030, but also in job creation and resolving unemployment. Tourism is at the forefront of our efforts.”
“Visit Saudi has opened up 15 international markets across key destinations across the world. We’re also listening to trade. We’ve partnered up with TRYP to design packages for Chinese customers whenever the Chinese market opens up. So we’re building our offering and tailoring it to those customer segmentations.”
She concludes, “As a region we are a magnet to the world, and we’re stronger together. Competition is good.”
Credit : CNN